Every business starts with an idea, that’s for sure. So far so good, but no business can be implemented without money. And as harsh as it may sound: there isn’t any magic and contrary to popular myth, nobody is waiting in the wings to throw money at you just because you have a new and exciting business idea. So, how then to find the money to start your business? Instead of collectively burying our heads in the sand, CODE_n examines three ways on how to fund your
Way to fund your business #1: crowdfunding
Sometimes, when your idea is convincing to the public, commonalty might as well be interested in paying for it. Mostly carried out online, this way people make pledges to your startup during a campaign to pre-buy the product for later delivery, give donations or qualify for a reward, such as a T-shirt. One of our alumni Helioz proved, that the concept actually works. With their product WADI, they will help improving human lives in developing countries – and guess what: fully financed by crowdfunding. Nowadays, there are even crowdfunding platforms for green crowdfunding – such as Econeers, who also happens to be one of our CODE_n partners. A positive side effect: you can get feedback early-on in the innovation process through the comments section of your projects and on updates. On the downside, you must spend time marketing the project, reaching out to reporters and being attentive to backers. Mostly, running a crowdfunding campaign can be considered a part-time, if not a full-time job.
Way to fund your business #2: capital investors
These are professional investors who invest into qualified startups. The institutional money spent is usually bound to a proven business model, ready to scale. Typically, those investors are looking for big opportunities and do not shrink back from million dollar investments. Needless to say, entrepreneurs have to choose between retaining full control and bringing the funds and expertise to take their business to the next level. Worth mentioning is, that an investor can be quite a life-saver in the battle of funding your business and building financial bridges. An angel investor, to be precise.
While capital investors may help startups achieve goals faster than crowdfunding or self-funding, they also bear the risk of a clash of management approaches.
Way to fund your business #3: bootstrapping
It’s never been this inexpensive to start a business – that’s why over 90 percent of startups nowadays are self-funded (also known as bootstrapping). These days, you may see this a lot; for example with Silicon Valley startups.
Whereas saving some money usually takes a bit longer than working for an external funding, it also provides the advantage that you don’t have to give up any management control. Your business is yours alone. Who knows, 6, 12 or 18 months down the line, you won’t have to worry about paying out an investor.